June sewerage sale plunged

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Water Authority-Cayman on Friday re-issued an invitation for tender bids for its sewerage system. 

Its 15 August deadline for submission of tender bids means that the sale of the wastewater assets will not go through in time for the government to factor the money from the sale into this year’s budget revenues as it had hoped.  

The government, which had initially taken the lead in trying to sell the sewerage system, instructed the Water Authority and its board in February that it had until 30 June – the end of the 2011/2012 fiscal year – to sell the assets so that the proceeds could be included in this financial year’s budget. 

The sale of the sewerage system would help pay for the completion of construction of two high schools, the government’s Finance Committee heard earlier this year. 

As of the most recent audited annual report of the Water Authority, for the fiscal year 2008/2009, the Water Authority sewerage system was valued at $19.4 million.  

This is the second time in two years that the wastewater system of the public utility company has been offered for sale. 

The previous tender closed in December 2010, but the Central 
Tenders Committee was unable to choose a winning bid from among two bidders, despite the validation period being extended six times. A third bidder, with the highest bid and lowest cost to customers, pulled out because of delays in a technical committee coming to a decision on its recommendations. 

According to minutes of meetings of the Water Authority board released under the Freedom of Information Law, the Ministry of Works, which oversees the Water Authority, sought to ask for updated proposals from the original three bidders based on new financial data instead of re-tendering, although that option appears to have been discarded as the Water Authority on Friday, 11 May, advertised a new tender request in the Caymanian Compass. 

Cabinet had previously appointed members to a technical committee to look into the bids from the December 2010 applications, but on the advice of the ministry, another technical committee, consisting of Water Authority management staff and two board members has been established, with Gelia Frederick-van Genderen, director of the Water Authority, as chairwoman.  

Minutes of Water Authority board meetings showed concerns had been raised by various bodies over how the original bidding process was handled. One of those concerns, brought up by the Office of the Auditor General, was that the decision to offer the assets for sale by tender was made by Cabinet and the evaluation of bids was carried out by a technical committee appointed by Cabinet, with no input from Water Authority management. According to the Office of the Auditor General, Cabinet had no remit to set up the technical committee. 

The Central Tenders Committee also had raised concerns that the evaluation report contained no substantial information on the impact the divestment of wastewater assets would have on customers and the local cost of doing business.  

Chairman of the Water Authority board Lemuel Hulston, according to the minutes of a 19 October, 2011, board meeting, said decisions on the sale of the sewerage system had been “completely removed from the authority management and to some extent out of the hands of the board” and that the divestment decision was a “political” one. 

The tender request invites eligible companies to tender to assume ownership of the 12.5 miles of Grand Cayman’s public wastewater infrastructure and to operate and maintain the system and provide wastewater services under an exclusive 25-year licence. 

The Water Authority handles 2 million gallons of sewage a day, as well as 20,000 gallons of contents from septic tanks delivered by commercial septage haulers. 

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The Water Authority is selling its wastewater system. – PHOTO: FILE
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